Using the exact formula, the nominal interest rate equals:
a. Real interest rate + Actual inflation + (Real interest x Actual inflation).
b. Real interest – Expected inflation.
c. Real interest + Expected inflation + (Real interest x Expected inflation).
d. Real interest – Expected inflation – (Real interest x Expected inflation).
.C
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Business executives who think the demand for their product is very elastic at the current price are assuming
A) the demand will become less elastic at a higher price. B) they will be able to sell more units at a higher price. C) they will sell fewer units but receive more dollars in sales revenue at a higher price. D) they will sell more units and receive more dollars in sales revenue at a lower price. E) they will sell more units but receive fewer dollars in sales revenue at a lower price.
If the production of a good gives rise to negative externalities, ________
A) the fixed cost of production is zero B) the variable cost of production is zero C) the private cost of production exceeds the social cost of production D) the social cost of production exceeds the private cost of production